India’s agricultural export earnings were ₹1,500 crore in 1990-91 and ₹8,000 crore in 2015-16. Compute the compound annual growth rate (CAGR) of agricultural exports over this 25‑year period.

hard 4 marks Class 12 · Economics · Economic Reforms Since 1991

Answer

9.07%

The correct answer is 9.07% — Subtract 1: $1.0907 - 1 = 0.0907$ or 9.07%. Thus the CAGR is about 9.07%.

Step-by-step solution

Use the CAGR formula: $CAGR = (\frac{Final}{Initial})^{\frac{1}{n}} - 1$ where $n$ is the number of years.
Plug in the values: $CAGR = (\frac{8000}{1500})^{\frac{1}{25}} - 1$ .
Compute the ratio: $8000 \div 1500 = 5.3333$ .
Take the 25th root: $5.333 3^{0.04} a pp r o x 1.0907$ .
Subtract 1: $1.0907 - 1 = 0.0907$ or 9.07%. Thus the CAGR is about 9.07%.

Common mistake: Using simple average growth instead of compound annual growth

Concept tested: CAGR calculation for export growth